Shared ownership/equity is a scam.

gaz141

gazfocus, who is "we" exactly?

"If you can answer the above we'll be able to give you advice...."

gazfocus

gaz141 wrote: »

gazfocus, who is "we" exactly?

"If you can answer the above we'll be able to give you advice...."

The collective members of the forum that are responding to the posters questions.

gaz141

edgex wrote: »

but there isnt just a mortgage payment is there?


1) mortgage + rent + service charge
or
2) mortgage + having to buy out the rest of the equity at some future point


in 1, you have no control over the rent or service charge, & are stuffed if you decide to sell up to escape their constantly escalating charges

in 2, you have to somehow save up at least 25% of the inflated value, even whilst paying a mortgage you can just about afford

is less than I will be paying on over inflated London rent

gaz141

gazfocus wrote: »

The collective members of the forum that are responding to the posters questions.

I apologise, I thought you were trying to drum up business

gazfocus

gaz141 wrote: »

I apologise, I thought you were trying to drum up business

Not at all....I'm only a FTB myself, buying a Shared Ownership resale property. I've had a load of great advice from the likes of Dave Ham and The J on these forums and done a heck of a lot of research before going for a mortgage so have a good idea of how these things work now

gaz141

thanks gaz, sorry, think I'm getting a bit nervy. Due to exchange next week, had probs with my solicitor and her mistakes, driving me nuts, this should be an easy process? Never mind some people on here spouting that SO properties are the Devil's spawn, adding to my stress. Are these people landlords trying to maintain such high rents?

edgex

Helga14 wrote: »

... Over the last four and half years I staircased twice and now I own 100% so can sell freely on the open market and can rent the flat. The price has of the flat has gone up from my original purchase price but obviously that doesn't mean anything till you actually sell but the initial value that I purchased the flat on was actually a very low value rather than overblown.

There are some negatives. Staircasing is a shag and costly. The first time I did it my legal fees and the valuation were covered because of an offer. It took a long time and was dull. However if I had brought and then sold to go up the market it would have been more costly and involved more hassle. The rent did go up, as did the service charge. The rent went up a fair bit when I staircased as they based it off the new value which I wasn't happy about and something I had missed in the small print. There are potential problems with all leasehold properties with costs for renovation being rather out of your control and you have to pay your share of the costs.

you started at 50%
staircased to 100% in 2 increments,so lets say to 75% then 100%

lets use some nominal figures;

rent on 50% = £250pm
rent on 25% would therefore = £175

for the rent to have gone up, rents in the area would have had to increase by at least 101% in the period!

if they hadnt increased by at least 101%, your rent should have reduced
see *1


as for service charges, they should only apply to the part that you own, not the rented part.
those service charges are your share of the maintenance costs, they shouldnt be asking for any more payments.

of course, by breaking out service charges seperately, they can keep increasing those without increasing the rent, & then claim that their tenants have had no rent increases.




*1 - by basing the rent as a % of 'value', the landlord has a vested interest in the value constantly increasing
rent should be based on the cost of providing the property, which will be a lot less than the inflated value they were sold at.

this inflated rental value will then feed into their future property valuation
its an ever upward spiral, sucking more & more money out of people, yet they get nothing for it.

edgex

geoffky wrote: »

and a good one in times of high inflation

Q: Does the rent ever go up?
A: Yes, the rent will increase each year linked to inflation. On most properties this will be RPI +0.5%, but check with our Sales team for more information regarding your chosen apartment. Full details are in your lease and will be explained at your financial interview.

so even if RPI was at zero, your rent still goes up

& how is RPI calculated?
well the government uses the Living Costs and Food Survey to track household spending, which includes housing costs


again, lets put some figures in;

if RPI for 2010 is 3%, your rent will increase by 3.5%

this 3.5% increase in rent then feeds into next years RPI figures
rent will be a big impact on a households RPI (lets say 50%)
if RPI(without housing) for 2011 is still 3%, when you include the rent portion, your RPI is 3.25%

so the next rent increase will be 3.75%
this again feeds into next years RPI

& so starts a cycle where the rent inflates at a greater rate than other household costs, & earnings



what happens if you get your hours reduced, or your employer dosnt issue any pay rises, or benefits get cut?
if you were renting 100% of the property, there would at least be the opportunity to negotiate with the landlord to reduce the rent
with these schemes, your stuck, the rent will continue to increase

edgex

gaz141 wrote: »

thanks gaz, sorry, think I'm getting a bit nervy. Due to exchange next week, had probs with my solicitor and her mistakes, driving me nuts, this should be an easy process? Never mind some people on here spouting that SO properties are the Devil's spawn, adding to my stress. Are these people landlords trying to maintain such high rents?

the shared ownership (part buy / part rent) actually achieve that by themselves;

tenants are locked into multi-year rental agrements, where the only way out is either to buy the rest of the equity, or sell & move.
these agreements have an inbuilt rent increase each & every year



if we use the RPI+0.5% as an example, with a rent of £250pm;

if RPI was at 3% for the year, the rent will increase by £8.75pm
(might not seem much, but thats still £105 for that year)

this new rent figure will feed into the amount of housing benefit that someone can claim, so that will increase*

if im a landlord, i want to charge a 'market rate' for my rent, therefore i look at what local properties are renting for, & what constraints there are for people on hb
so i may as well base my rent on the increased SO & hb figures

oh look, everyones rent just went up




* of course, as the amount paid out via HB increases, so it has to be met via tax revenues. if my tax bill increases, i look at increasing my revenues, so i increase the rent.

edgex

poppy10 wrote: »

Surprised you didn't know about them, Brit, the restrictions you have put in bold are pretty standard T&Cs for shared ownership schemes: an exclusive period of between 6 and 12 weeks in which the property is exclusively marketed by the housing association at a set 'market value' determined by their surveyors, even if that is an unrealistic value. The restriction on renting out the Homebuy property which you 'own' is also well established. What that poster didn't mention is that even if he drops the price after the exclusive marketing period, the housing association could still have the right to 'vet' potential purchasers and could reject them if they are not felt to be suitable - potentially ruling out cash investors who wouldn't have problems with finding a mortgage.

so the HA get to block any real selling activity for the duration of their exclusivity period
wonder if they stop the rent & service charges if the property is empty?
what marketing effort is required of them? surely thats in the agreement?

presumably the vetting process is completely transparent & hasnt changed since they first 'sold' the properties?
they are also able to do it within a timeframe that wouldnt make purchasing one of these properties take any longer than a normal property?
presumably they dont charge the seller or potential buyers a 'vetting fee'?